Happy Tax Day!
Whether you filed your tax return weeks ago, are sending it off sometime today, or have filed for an extension, you may be wondering if everyone else is paying their share of taxes. Often, this question comes up from people who worry that families with low incomes don’t owe any income taxes.
Households with incomes below $15,000 generally owe no state income tax in Arizona. But it may surprise you to know that when it comes to all taxes, these Arizona families pay the highest state and local taxes as a share of their income.
Combining all state and local taxes – income, sales, property, etc. – Arizona families with the lowest incomes pay $12.50 per $100 of income – more than twice what families with the highest incomes pay.
You may also be surprised that many corporations and higher income families owe little or no state income taxes.
3 Out of 4 Corporations Pay the Minimum State Income Tax
In 2011 (the latest data available), three out of four corporations that filed income taxes in Arizona had the minimum tax liability of $50. Many corporations significantly reduce or eliminate entirely their income tax bill through the use of tax credits. In 2011, corporations reduced their tax liability by $120 million through the use of tax credits and carried another $1 billion over to be used in future years.
Households With Incomes Above $100,000 Can End Up Paying No State Income Taxes
Higher income households can eliminate their tax liability through the use of exemptions, deductions, and tax credits. A married couple filing a joint return can wipe out a tax bill of $3,700 through the use of five commonly available income tax credits.